The prospect of a major agtech funding resurgence in 2025 is dwindling, but a sea change in the type of companies receiving funding could have wider implications for the industry moving forward.
Agtech capital investment deals reached their lowest point in several years in Q2 2025, with 117 agtech investments being made in Q2 2025, compared to 155 in the previous quarter, PitchBook reported. Additionally, Q2 2025 deals were valued at $1.5 billion, dropping 24.7% from the previous quarter, PitchBook added.
Investors are shifting their focus from ag biotech (i.e., biologicals) to precision ag companies, as labour challenges intensify, especially amid changing US immigration and trade policies, Alex Frederick, senior research analyst at PitchBook, told AgTechNavigator. Precision ag companies raised $580.2 million across 36 deals, while ag biotech companies garnered $270.6 million across 35 deals.
“This was the first quarter where, in at least the last several years, we saw more deals going to precision ag than into ag biotech, which speaks to a number of things. The issue of labour challenges has always been, at least for the last several decades, a growing issue in agriculture, and with the deportations that we have seen in the last few months, it will become an ever more pressing issue,” Frederick elaborated.
Early-stage startups are finding it increasingly harder to secure funding, with seed and early-stage investments accounting for 15% of total funding, compared to 54% for late-stage and 20% for venture growth, PitchBook stated. “This idea of flight to quality has been a major trend,” which is likely to continue in sequential quarters, potentially further cutting deal counts and values, Frederick added.
However, founders who can navigate this current moment of lower funding might reap the benefits on the other side, Frederick noted. Additionally, many of the investors who entered agtech during the COVID hype are no longer in the space, meaning remaining investors typically have a deep understanding of the sector and are willing to invest in promising companies, he added.
“Looking back at the Great Recession in 2008, many great companies and well-built companies came out of that time because they learned to be cash-flow efficient and build [profitable] businesses because money was not being thrown at them,” Frederick said.
‘A lot of ways to burn cash’ with indoor ag
Indoor ag companies continue to face headwinds and represented the smallest slice when it came to deal values and count for the first half of 2025. Only seven deals were made into indoor ag companies, representing $476.3 million, PitchBook reported.
Last week, the indoor ag industry received another blow, with London-based Vertical Future seeking a buy after losing £10 million in 2024, per reporting in City AM.
“The space is maturing, the ecosystem is growing, and there are more exit opportunities, but it does continue to be a challenging exit environment. ... I would expect to continue to see fewer buyouts, but incumbents, like John Deere, seem well positioned to make acquisitions.”
Alex Frederick, senior research analyst at PitchBook
Governments remained interested in vertical and indoor agriculture, but the economics of building these facilities typically do not work, Frederick explained. Millions of dollars are needed to build indoor ag facilities, and growers must invest a “significant amount of money on R&D and developing new crop varietals that work well in these environments,” he added.
“There are a lot of ways to burn cash, and it takes a lot of heads of lettuce or a lot of tomatoes to be able to recoup and actually turn a profit,” Frederick elaborated.
Where are the agtech exits?
Agtech exits in Q2 2025 were in line with the last three quarters, with 15 exits, including John Deere acquiring drone and imagery analytic company Sentera and Syngenta scooping up plant biotech company Intrinsyx Bio, PitchBook reported.
While large strategics are actively buying, farm management software providers are consolidating, like in the case of DeHaat acquiring precision ag and soil health company Neerx. Additionally, Total Specific Solutions acquired workforce management company L1nda.
“The space is maturing, the ecosystem is growing, and there are more exit opportunities, but it does continue to be a challenging exit environment. ... I would expect to continue to see fewer buyouts, but incumbents, like John Deere, seem well positioned to make acquisitions,” Frederick elaborated.
